As of January 1, 1981, the mental health coverage provided by Blue Cross and Blue Shield for federal workers and their dependents was significantly changed. The change was to increase the deductible for the high option plan from $100 to $150 and from $200 to $250 for the low option plan, combined with an increase in the coinsurance rate from 20% to 30% for the high option plan and from 25% to 35% for the low option plan. The original focus of this research, which began in August 1982, was to analyze the impact of this change in coverage on the treatment patterns and cost patterns of mental health service use by federal employees. The first two years of the study focused on demand models based on summary measures of utilization (i.e. number of visits per year per year per person); the following three years focused on the construction on demand models based on episodes of mental health treatment. The research proposed herein analyzes mental health service use among minorities (Blacks and Hispanics) and women. The unique data base we have includes ethnic minorities and women in FEHBP from 1979 and 1981, which permits us to conduct a separate demand analysis for Blacks, Hispanics and for males and females. We will employ the three part demand model developed in our earlier work. This model examines the probability of any mental health service utilization (Part I), the probability of any impatient or outpatient care (Part II) and the level of inpatient or outpatient utilization for the user group (Part III). The model is estimated with multivariate techniques and includes measures of price (copayment and deductible), salary, demographic variables and also includes variables such as psychiatric per capita and hospital visits.